The dangerous allure of the "Billion Dollar Startup Club"
Yesterday Forbes published a piece on “The Billion Dollar Startup Club”. As more attention is paid to the world of entrepreneurship and more and more people are aspiring to start their own companies, there’s a disturbing trend developing of people deciding to found a company simply to get rich.
More and more, I hear the question “what do you hope to achieve by founding X” answered with “we want to make X a billion dollar company”. That’s often followed by some mention of “disruption” or “innovation” or even “impact”, but the core purpose of these founders is clear – to make boatloads of money. Aside from the fact that there’s already an industry for those primarily interested in accumulating wealth, that’s a recipe for startup disaster.
While it appears the vanity $1B mark matters even to some entrepreneurs en route to big success,1 the harms in striving to be included in the “billion dollar club” manifest most in aspiring entrepreneurs – those founders just setting off on their startup adventures.
The best startups are born because the founders see a problem in the world that no one else is fixing, and decide to build a solution themselves. When you ask the best founders what they hope to achieve with their companies, you get answers like “I want online payments to stop sucking” or “I want the world to be a more connected place” or “I want people to have a voice in the political process”.
The best founders first and foremost want to impact the world in a way they believe is meaningful and if they get rich doing so, great, but that’s rarely the goal.
If you’re an aspiring entrepreneur, I urge you to focus on a solving a problem you feel is deeply important. When things get really tough, a meaningful mission will help push you through. When you’re trying to convince the best and brightest to join you, working on impactful things will help.
And if the chances are that you’re going to fail anyway, you might as well fail attempting something meaningful.
1 There are 22 startups at the “billion dollar” valuation mark, but only 6 at the 1.1 B mark. I bet there are far more at the 1B mark than at the 900M mark as well.
Thanks to Freddie Andrade and Ela Madej for reading drafts of this post